The Milliman Mortgage Repurchase Index (MMRI) is a lifetime repurchase rate estimate calculated at the loan level for a portfolio of single-family mortgages. For the purposes of this index, repurchase rate is defined as the likelihood that a loan will have to be bought back by the seller from the secondary market agencies, Fannie Mae or Freddie Mac. The results of the 2025 Q1 study reflect the most recent acquisition data available from Fannie Mae and Freddie Mac, with measurement dates starting from April 1, 2023.
Key findings
The value of the MMRI for government sponsored enterprise (GSE) acquisitions is up for both Freddie Mac (from 0.301% to 0.309%) and Fannie Mae (from 0.178% to 0.185%). This was driven by a slight deterioration in borrower credit risk attributes across FICO, LTV, and average borrower debt-to-income (DTI). There has also been a slight increase in the share of ARM loans in the newest origination cohort. (See Figure 1.)
Figure 1: MMRI 2025 Q1 dashboard for GSE loans
Summary of trends
Over 2025 Q1, our latest MMRI results indicate that repurchase risk has increased slightly for GSE acquisitions.
From a repurchase perspective, the slight increase in average DTI from 2024 Q4 into 2025 Q1 is the primary focus. Based on Fannie Mae’s recent quality control results over the period from October 2024 to December 2024, the top defect reasons are related to the borrowers DTI (e.g., lack of documentation, incorrect income calculation, or improper monthly payment calculation).1 Figure 2 shows the volume of originations by DTI segment for origination quarters 2023 Q2 to 2025 Q1:
Figure 2: Origination volume by DTI
| Freddie Mac | Fannie Mae | |||||||
|---|---|---|---|---|---|---|---|---|
| [0,45) | [45,48) | [48,50) | [50+] | [0,45) | [45,48) | [48,50) | [50+] | |
| 2023 Q2 | 68.8% | 13.4% | 10.6% | 7.1% | 73.2% | 13.3% | 9.3% | 4.3% |
| 2023 Q3 | 65.0% | 14.3% | 11.9% | 8.8% | 71.6% | 13.5% | 10.0% | 4.8% |
| 2023 Q4 | 64.3% | 14.7% | 12.8% | 8.2% | 69.3% | 14.2% | 11.3% | 5.2% |
| 2024 Q1 | 67.6% | 14.1% | 11.7% | 6.6% | 70.8% | 13.6% | 10.5% | 5.1% |
| 2024 Q2 | 66.8% | 14.3% | 11.8% | 7.1% | 70.5% | 13.6% | 10.9% | 5.0% |
| 2024 Q3 | 69.0% | 14.0% | 11.1% | 5.9% | 71.3% | 13.5% | 10.4% | 4.7% |
| 2024 Q4 | 68.6% | 13.8% | 11.1% | 6.6% | 70.6% | 13.6% | 10.5% | 5.2% |
| 2025 Q1 | 67.6% | 14.2% | 11.5% | 6.7% | 69.8% | 13.9% | 11.0% | 5.4% |
As a borrower’s DTI approaches 50%, any manufacturing defects related to income or debt can result in the loan being subject to repurchase. The higher DTI ratios on newly originated loans is, in part, driven by movements in interest rates. All else equal, higher interest rates lead to higher monthly payments for borrowers, raising the aggregate DTI level of new originations. The average 30-year mortgage interest rate rose 17 basis points from 2024 Q4 to 2025 Q1, as shown in Figure 3:
Figure 3: Average 30-year U.S. mortgage rates
As interest rates remain at an elevated level, this makes proper income documentation and calculations critical to originators, as low origination volume has increased the relative cost associated with any repurchase. The recent release of the Freddie Mac Income Calculator,2 along with improvements to the existing Fannie Mae Income Calculator,3 may help smaller lenders reduce their representation and warranty risk related to income calculations and bring down the defect and repurchase rates.
The GSEs’ acquisition of adjustable-rate mortgages (ARMs) as a share of the total acquisition volume has ticked up slightly compared to the last few quarters. Figure 4 shows the share of ARM acquisitions going back to 2012 Q1.
Figure 4: ARM volume as share of acquisition volume
In context, ARM acquisitions by the GSEs are still low relative to 2013 to 2014 levels. In line with heightened risk from DTI related defects, ARM originations face different standards for origination.4 Lenders are required to qualify loans based on the highest expected interest rate at reset. The intent is to mitigate the risk of payment shocks to borrowers in the shadow of the Great Recession. The risk of ARM repurchase is therefore tied to interest rate volatility.
Acquisition volume receiving an appraisal waiver has declined slightly for the 2025 Q1 cohort. The volume-weighted appraisal waiver rate is shown in Figure 5.
Figure 5: Percentage receiving appraisal waiver
| Origination quarter |
Volume ($B) |
Received appraisal waiver |
Did not receive appraisal waiver |
|---|---|---|---|
| 2023 Q2 | $178.43 | 11.4% | 88.6% |
| 2023 Q3 | $169.26 | 12.1% | 87.9% |
| 2023 Q4 | $130.22 | 9.9% | 90.1% |
| 2024 Q1 | $134.75 | 0.6% | 99.4% |
| 2024 Q2 | $183.82 | 9.0% | 91.0% |
| 2024 Q3 | $190.53 | 15.0% | 85.0% |
| 2024 Q4 | $180.02 | 16.2% | 83.8% |
| 2025 Q1 | $134.91 | 14.4% | 85.6% |
Appraisal waivers are awarded based on a combination of borrower attributes, loan attributes, and confidence in proprietary property valuation model estimates. A higher percentage of appraisals adds another layer of risk for potential defects. Freddie Mac announced an expansion to the appraisal waiver program as of March 2025.5 This will likely have an impact on the Milliman 2025 Q2 MMRI report.
Beyond tools to improve income reporting and calculation, Freddie Mac has announced expansion of a pilot “Performing Loan Repurchase Alternative” program.6 This allows sellers to pay a fee to Freddie Mac for defects rather than buy the loan back entirely. The economics of this program would vary depending on the size of the originator. Currently, it is only available for select lenders; however, industry-wide rollout could materially reduce actual repurchase rates. There is no similar program or pilot currently offered by Fannie Mae.
About the MMRI
Milliman is an expert in analyzing complex data and building transparent, intuitive, and informative econometric models. We have used our expertise to assist multiple clients in developing econometric models for evaluating mortgage risk both at the point of sale and for seasoned mortgages.
The MMRI uses econometric modeling to develop a dynamic model that clients can apply in multiple ways. Because the MMRI produces a lifetime repurchase rate estimate at the loan level, clients use it as a benchmarking tool in loan defect pricing. The repurchase scoring methodology is constructed separately for repurchases that occurred while loans were either performing or delinquent. For new origination cohorts, Milliman applies these scoring methodologies and weights them using the probability the loan will roll into serious delinquency. In addition, Milliman uses a mix of borrower attributes and loan characteristics to identify trends most associated with loan repurchase.
Milliman is one of the largest independent consulting firms in the world and has pioneered strategies, tools, and solutions worldwide. We are recognized leaders in the markets we serve. Milliman insight reaches across global boundaries, offering specialized consulting services in mortgage banking, employee benefits, healthcare, life insurance and financial services, and property and casualty (P&C) insurance. Within these sectors, Milliman consultants serve a wide range of current and emerging markets. Clients know they can depend on us as industry experts, trusted advisers, and creative problem-solvers.
Milliman's Mortgage Practice is dedicated to providing strategic, quantitative, and other consulting services to leading organizations in the mortgage banking industry. Past and current clients include many of the nation's largest banks, private mortgage guaranty insurers, financial guaranty insurers, institutional investors, and governmental organizations.
1 Fannie Mae. (2025, June 13). Understand top defects to help strengthen loan quality. https://singlefamily.fanniemae.com/originating-underwriting/loan-quality/quality-insider/june-2025.
2 See https://sf.freddiemac.com/tools-learning/technology-tools/our-solutions/income-calculator.
3 See https://singlefamily.fanniemae.com/applications-technology/income-calculator.
4 Fannie Mae. (2025, August 6). Originating & Underwriting Selling Guide. B3-6-04, Qualifying payment requirements (02/07/2024). Retrieved on [August 13, 2025], from https://selling-guide.fanniemae.com/sel/b3-6-04/qualifying-payment-requirements.
5 Freddie Mac Single Family. (2024, December 12). Loan Quality Advisor enhancement to support ACE and ACE+PDR expansion. Retrieved on [August 13, 2025], from https://sf.freddiemac.com/articles/news/loan-quality-advisor-enhancement-to-support-ace-and-acepdr-expansion.
6 Freddie Mac Single Family. (n.d.). Repurchase alternative FAQ. Retrieved on [August 13, 2025], from https://sf.freddiemac.com/faqs/repurchase-alternative-faq.